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Innovation at GF

Acting on our customers' needs

At GF innovation processes are based on a close collaboration with
customers in order to address their specific needs. GF’s quest
for customer-oriented solutions is reflected in its global R&D
centers, which contribute their expert knowledge to the development of
well-adapted solutions – to remain our customers’ first choice.

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All about GF

Our Profile //

GF comprises three divisions GF Piping Systems, GF Automotive,
and GF Machining Solutions. Founded in 1802, the Corporation is
headquartered in Switzerland and is present in 32 countries, with 124
companies, 48 of them production facilities. Its approximately 14 000
employees generated sales of CHF 3.77 billion in 2013. GF is the
preferred partner of its customers for the safe transport of liquids
and gases, lightweight casting components in vehicles, and
high-precision manufacturing technologies.

GF Piping Systems

GF Piping Systems is a leading supplier of piping systems made of
plastics and metal. The division focuses on system solutions and
high-quality components for the safe transport of water and gas in
industry, utility, and building technology. Its product line includes
fittings, valves, pipes, automation and jointing technology and covers
all water cycle applications.

GF Piping Systems supports its customers in over 100 countries
through its own sales companies and representatives. The division is
present in Europe, Asia and the Americas withmore than 30
manufacturing sites and research and development centers, which also
support energy-saving use of raw materials and resources.

Key figures GF Piping Systems

million CHF

2013

2012

Sales

1 402

1 299

EBIT

141

135

Return on sales (EBIT margin) %

10.1

10.4

Invested capital (IC)

621

559

Return on invested capital (ROIC) %

18.7

18.6

Employees at year-end

6 095

5 282

GF Automotive

GF Automotive is a technologically pioneering development partner and
manufacturer of lightweight cast components and systems made of
ductile iron, aluminum and magne-sium for the global automotive
industry as well as a variety of industrial applications. The highly
complex lightweight com-ponents contribute to making modern vehicles
lighter and reducing the CO2 emissions.

GF Automotive manufactures some 600 000 tons of lightweight
components at 9 production plants in Germany, Austria, and China. In
those countries as well as in Switzerland, Korea and Japan it operates
sales offices. The lightweight research and development competency is
in Schaffhausen (Switzerland) and Suzhou (China).

Key figures GF Automotive

million CHF

2013

2012

Sales

1 498

1 579

EBIT

70

53

Return on sales (EBIT margin) %

4.7

3.4

Invested capital (IC)

384

437

Return on invested capital (ROIC) %

16.1

12.1

Employees at year-end

4 947

5 188

GF Machining Solutions

GF Machining Solutions’ electrical discharge, high-speed
milling and laser texturing machines, along with automation solutions,
make it the world’s leading provider to the tool and mold making
industry and to manufacturers of precision components. Most important
customer segments are information and communication technology,
aerospace, and the automotive industry.

The division has its own sales companies in more than 50 countries
and production plants in Switzerland, Sweden, and China. GF Machining
Solutions operates research and development centers in Meyrin, Losone,
and Nidau (Switzer- land), Vällingby (Sweden), Beijing, and
Changzhou (China).

Key figures GF Machining Solutions

million CHF

2013

2012

Sales

867

842

EBIT

51

45

Return on sales (EBIT margin) %

5.9

5.3

Invested capital (IC)

274

273

Return on invested capital (ROIC) %

15.2

16.4

Employees at year-end

2 873

2 798

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Highlights 2013

Innovative solutions

At the 4th GF Technology Day in October more
than 60 analysts and journalists came for a presentation of several
key innovations and for a glimpse at what is in store at GF
regarding technology. The company invested more than CHF 100 million
in research & development and registered 46 new patents last
year. The three divisions showcased their latest innovations that
were explained during workshops and key notes by the heads of the divisions.

Revisit on YouTube // GF is present on Social Media
channels. The video of the Technology Day you can see below is also
available on our YouTube channel.

Precise machining of aircraft components // GF
Machining Solutions presented a novel way of machining key
components of aircraft engines with electro-erosion machines in
order to substitute the expensive broaching process.

Impressed guests // The Technology Day offered visitors
a special opportunity to be better acquainted with the products and
services of GF, while getting a sense of what the R&D strategy
is. At the same time, making it possible to speak to management
directly, guests got a lot of valuable market news, which
facilitates the assessment of the financial and strategic future of
the company.

GF Piping Systems

Hakan Plastik A.S., Turkey

Welcome Hakan Plastik // GF announced the acquisition of a
majority stake in Hakan Plastik A.S. in Cerkezköy (Turkey) in
May. Hakan Plastik is the leading provider of plastic piping systems
in the building technology and water infrastructure markets in
Turkey, the Middle East and Eastern Europe. Jointly, GF Piping
Systems and Hakan Plastik provide a unique platform for further
growth in the growth markets of those regions.

Largest pipe ever built // For the first time GF Piping
Systems built a polypropylene spiral winding sewage pipe with a
diameter of 3.5 meters – the largest pipe GF Piping Systems has ever
produced. In the province of Haining, close to Shanghai (China),
the pipes of this size are used for municipal water transfer and
also serve industrial purposes.

GF Automotive

The R&D center of GF Automotive, Schaffhausen (CH)

Major order for GF Automotive // GF Automotive
received a major order for over CHF 400 million from Audi in June.
The light structural parts for the German car manufacturer Audi will
be produced by aluminum pressure die-casting in Europe and China for
several new car models. The new design features a better
functionality and a lower number of components, resulting in a
weight reduction of over 50%.

IMA Lightweight Design Award // GF Automotive won
the first prize at the International Magnesium Association (IMA)
Lightweight Design Awards last May in China. The GF roof header
forms the central part of the roof of Opel’s convertible model
Cascada. It was top of the category “Cast Component Design”, an
award which the division has won for the second time.

GF Machining Solutions

GF Machining Solutions at EMO 2013

Inspiring at the EMO 2013 // At the EMO fair in Hanover
(Germany) last September, GF Machining Solutions presented innovative
products, solutions, and services and highlighted its application and
process expertise. Customers visiting the divisions’ stand were
impressed by the new ways in which they can enhance their businesses
in fast-growing market segments and placed major orders for over 100
machines as well as numerous customer services contracts.

Renaming: GF Machining Solutions // On 1 January
2014, GF AgieCharmilles has been renamed GF Machining Solutions to
better reflect the diversity of its present offering featuring
electrical discharge machining, milling, laser texturing and
auto- mation lines. The new name also offers the division
the opportunity to communicate its far broader scope, than
merely being a supplier of machine tools.

Our success stories

Letter to the Shareholders

A substantial rise in performance

GF generated sales of CHF 3 766 million in 2013 for a nominal
increase of 1%. On a like-for-like basis, corrected for changes in the
scope of consolidation and currency effects, growth amounted to 2%.

After a weak first quarter, sales recovered especially in the second
half year, which showed growth of 4% on the back of better market
conditions but also market share gains.

Operating profit (EBIT) rose 13% to CHF 251 million as plants were
better loaded in the second half and overhead costs were kept at the
previous year’s level.

The EBIT margin went up from 6.0% to 6.7%, and the return on invested
capital (ROIC) from 15.7% to 16.7%. All three divisions contributed to
the profitability increase and generated ROICs well above their cost
of capital.

Free cash flow before acquisitions went up 76% to CHF 174 million
thanks to the higher profit but also as net working capital was kept
at previous year level and capital expenditures went slightly down.

The number of employees increased by 654 to 14 066 mainly on account
of the acquisition of Hakan Plastik (Turkey) in July 2013.

Net profit grew 5%, amounting to CHF 145 million after the deduction
of CHF 26 million resulting from the divestment of the gravity
die-casting business of GF Automotive.

Earnings per share stood at CHF 34, after the above mentioned one-off
effect. The Board of Directors will propose a dividend of CHF 16 (CHF
15 in 2012) at the Annual Shareholders’ Meeting.

Significant progress towards strategy implementation //

The acquisition in July 2013 of Hakan Plastik, a leading Turkish
plastic piping systems manufacturer with annual sales of CHF 100
million, brings GF Piping Systems a strong presence in Turkey, in the
Middle East and Eastern Europe as well as a whole array of
complementary products, which will be sold by the whole GF Piping
Systems sales organization.

The divestment of the aluminum gravity die-casting plant of
Herzogenburg (Austria) at the beginning of 2014 allows GF
Automotive to focus on its core iron sand casting as well as aluminum
and magnesium pressure die-casting activities.

The cost reduction program of CHF 25 million announced at the
beginning of the year has been implemented in full and already
supported the second-half result. It will be fully effective in 2014.

Yves Serra, President and CEO and Andreas Koopmann, Chairman of the Board of Directors.

All three divisions increased their sales and operative profits

GF Piping Systems

GF Piping Systems increased its top line by 8% to CHF 1 402 million,
of which acquisitions accounted for 5% and organic growth 3%. A long
and cold winter impacted sales negatively during the first four months
in Europe, compensated however by higher revenues as of May,
especially in Asia.

Industrial applications recovered in the second half in all regions.
Building technology went up significantly thanks to new products in
Europe and a larger customer base in China. Utility-related sales
remained subdued in Europe but increased significantly in the Americas
and in Asia.

Thanks to the acquisition of Hakan Plastik as well as higher growth
in Asia and North America, sales outside of Europe accounted for about
60% of the total.

The division increased its operating profit by 4% to CHF 141 million
thanks to a better plant load factor and despite negative currency
effects in Turkey, India, Japan and Brazil.

GF Automotive

GF Automotive saw a nominal 5% decrease in sales to CHF 1 498 million
owing to the divestment end of 2012 of its sand casting aluminum
plants in Germany. Organic growth stood at 1%.

The Chinese car industry again reported double-digit growth, and the
two plants of GF Automotive in that country were fully loaded.

The passenger car industry in Europe however remained on a downwards
trend especially during the first half. In the second half, however,
the division significantly increased its truck-related sales in Europe
as customers increased production in view of the year-end Euro 6
deadline but also thanks to significant market share gains on new
generations of commercial vehicles.

The division increased its operative result by 32% to CHF 70 million,
thanks to a better plant utilization in the second half and as the
cost reductions implemented in the first half-year became effective.

The capacity of the two Chinese plants of GF Automotive is being
increased by 50%, effective 2015. In Singen, (Germany) the
construction of a cutting-edge production line for light-weight
components will be started this year for completion end of 2015. It
will replace two existing lines, boosting the productivity and
competitiveness of this important facility.

The division increased sales by 3% to CHF 867 million in an overall
subdued market, thanks to its success in less cyclical market segments
like aeronautics, medical devices and smart phones.

Sales in Europe and the US rebounded whilst demand declined in
countries affected by currency depreciations such as India or Brazil.
In the important China market, the sales development was pretty uneven
as tighter financing affected privately owned companies.

The operating profit of the division went up 13% to CHF 51 million
thanks to better margins and higher productivity.

At the EMO 2013 in Hanover (Germany), GF Machining Solutions
presented products adapted to its key market segments and in
particular new solutions to replace broaching with wire-EDM for the
production of key aircraft engine components.

Financing secured

GF emitted two bonds of CHF 150 million each in August 2013 with
maturities of 5 and 9 years respectively and coupons of 1.5% and 2.5%.
The corporation tapped the favourable market conditions in order to
secure funds for the redemption of its 4.5% CHF 300 million bond due
in September 2014 but also to allow for the financing of further
acquisitions. The equity ratio stood at 31% end of 2013.

Accounting and objectives adapted to Swiss GAAP FER

GF has changed its accounting standard from IFRS to Swiss GAAP FER as
from fiscal year 2013 on. The 2012 figures have all been adapted as
follows in order to ensure a correct comparison with 2013: The change
of the accounting standard had no material impact on the 2012 results.
It just led to a slight EBIT rise of CHF 1 million, therefore bringing
it to CHF 222 million. In the balance sheet, the major change concerns
goodwill, which has been offset with equity.

This leads together with other effects to a reduction of equity in
the amount of CHF 262 million as per 1 January 2012. The ROIC
objective of 15% at the horizon 2015 has been translated into a 16% to
20% range, reflecting the deduction of goodwill from the invested
capital according to Swiss GAAP FER.

Mid-term objectives confirmed

Markets remain volatile but the second half has shown an upwards
trend in several markets relevant to our corporation. GF Automotive
and GF Machining Solutions built up a strong order book, certainly a
good sign for 2014.

Moreover, thanks to the latest transactions, a better portfolio
balance will be achieved in 2014 with GF Piping Systems and GF
Automotive accounting each for about 40% of total sales. This is a
further milestone in the implementation of the 2015 strategy of the
corporation.

The management of GF is therefore convinced, that barring unforeseen
circumstances, further increases in both top and bottom lines are
possible in 2014 and confirms its 2015 profitability objectives of a
ROIC in the 16% to 20% range and an EBIT margin above 8%.

Articles of Association to be adapted for all listed companiesin Switzerland

The ordinance against excessive remuneration in listed companies that
came into force on 1 January 2014 requires certain adaptations in the
Articles of Association at all listed companies in Switzerland within
two years.

Accordingly, the Board of Directors will propose at the 2014 Annual
Shareholders’ Meeting the revision of a number of articles,
including those related to the representation of shares, the elections
of the Board of Directors and Compensation Committee members, as well
as the limitation of mandates held by the members of the Board of
Directors and the Executive Committee of Georg Fischer Ltd in other
companies.

The revision of the Articles of Association regarding the
remuneration of both Board of Directors and Executive Committee will
be reviewed by the Board of Directors during 2014, upon the
assessment and advice of the newly elected Compensation Committee, and
submitted for approval to the 2015 Annual Shareholders’ Meeting.

Working together to serve our customers

We express our gratitude to our investors and our banks for their
continuing trust as evidenced by the successful placement of our two
bonds in 2013.

We also send our heartfelt thanks to our customers for their constant
feedback and close collaboration which inspires and allows us to serve
them better and quicker. Finally, our special thoughts go to our
employees whose willingness to live up to our values and work together
across borders makes all the difference.

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Yves Serra, CEO interview

“Customers are a key source of inspiration for us”

“Innovations – inspired by our customers” is the title of your annual report. What do you mean by this?

Customers are a key source of inspiration for us. By noticing how
they use our products, by working together on addressing their needs,
we bring about innovations which have a better chance to really serve them.

Can you provide examples of such GF innovations?

Take the three cases presented on the following pages. GF Piping
Systems developed the large-size fittings and valves as well as all
sensors required for the huge amount of water used at the vast
water-based amusement park near Sydney. We guarantee therefore their
compatibility, eliminating leaks and contamination. GF Automotive was
involved in the development of the new DAF commercial vehicle at a
very early stage and designed components which allow DAF to reduce the
weight of each truck by 70 kilograms. This clearly helps to reduce
diesel consumption and CO2 emissions. In the aeronautics sector,
GF Machining Solutions worked together with its customer MTU and
adapted its high speed milling machines, inclu-ding a new CNC
(Computerized Numerical Control) to fit the needs of its customer
regarding the large scale produ-ction of blisks for the new aircraft
engines to be mounted on the Airbus A320neo.

GF has decentralized its R&D centers. Why?

Customers in our market sectors want to have partners who are
located in their countries and therefore who can better understand
their needs and quickly act upon them. That is why we have
decentralized R&D operations in the major markets where we
operate, in Europe, in the Americas, and in Asia.

CEO Yves Serra

"Customers in our market sectors want to have partners who are located in their countries."

What is the role of Switzerland in this regard?

We have over the years accumulated a huge amount of expertise in
Switzerland and our central R&D facilities and are therefore
located in this country. In addition, we are producing the core
components for our machine tools or our piping systems in Switzerland
because this is where we have the know-how to do so. The R&D
facilities worldwide benefit from the support of our engineers based
here, for example in the transfer of technology and expertise. We
also coordinate from Switzerland the worldwide R&D activities to
make sure of their efficiency and avoid duplications.

All the more important to have the right talents. What are you doing to make GF attractive to them?

We continuously offer a large amount of internships to business
and engineering students across the world. We collabo-rate on numerous
research and development projects with the key universities located in
the main markets. For example, in 2012 we started a new collaboration
with the Department of Management, Technology and Economics (MTEC) at
ETH Zurich, one of the world’s leading universities. The
project, which will continue in 2014, offers master class students
pro-jects for their theses which give them insights into an actual
company environment, while we get an outside perspective and new
ideas. All the above we do to make sure GF not only remains but is
also regarded as an attractive employer offering interesting jobs internationally.

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Organization of GF

Georg Fischer Ltd, the Holding Company of the Georg Fischer
Corporation, is organized under Swiss law, headquartered in
Schaffhausen (Switzerland) and listed on the SIX Swiss Exchange.

Board of Directors //

The ten members of the Board of Directors, elected individually by
the Shareholders’ Meeting, are responsible for determining the
Corporation’s strategic direction, the design of accounting, the
financial controlling and financial planning. It appoints the
Executive Committee and has ultimate responsibility for supervising
and monitoring the management of Georg Fischer Ltd. All members of the
Board of Directors are non-executive.

A shared corporate culture is becoming increasingly important with the spread of internationalization.

Executive Committee //

The Chief Executive Officer is responsible for the management of the
Corporation. Under his leadership, the Executive Committee addresses
all issues of relevance to the Corporation, takes decisions within its
remit and submits proposals to the Board of Directors. The Heads of
the Divisions and the Corporate Staff Units are responsible for
drafting and achieving their business objectives and for managing
their units autonomously.

Corporate structure //

GF Corporation is organized in three divisions and two Corporate
Staff Units. The divi-sions are GF Piping Systems, GF Automotive and
GF Machining Solutions. The Corporate Staff Units are Finance &
Controlling and Corporate Development. The Heads of the Divisions and
the Corporate Staff Units are responsible for managing their
businesses and for achieving their business objectives.

Corporate center //

The CEO and the CFO form the Corporate center in the narrower sense.
The Corporate center is closely involved in management, planning, IT,
communications, finance, management development, and corpo-rate
culture and is supported in these tasks by a team of about 50 people.
The Corporate center ensures that risk manage-ment, transparency,
corporate governance, sustainability, and compliance practices meet
the requirements of the owners and the public, and it supports the
Board of Directors in meeting its responsibilities.

Finances //

Corporate Finance & Controlling uses powerful information systems
to ensure the time-critical financial management of the Corporation. A
standardized system of financial reporting is used throughout the
entire Corporation, guaranteeing immediate and complete transparency.
Currency, interest-rate, and credit risks are monitored and managed at
Corporation level.

Management development //

Strategically important competencies and information are shared and
made available throughout the Corporation. Considerable importance is
attached to internal training and to the focused nurturing and
development of leaders and managers.

Communication //

The Corporation has a strong brand with GF. In 2013, the company has
implemented a rebran-ding and an alignment of its brand architecture.
A new Corporate Design has been adopted worldwide throughout all three
divisions in October. The new Corporate Design, internal and external
communications as well as investor relations (i.e. relations with the
financial markets) reinforce the public perception and the image of
the Corporation.

Corporate values //

Shared corporate values are the basis for overall sustainable
development and are becoming increasingly important with the spread of
internationalization. The Corporate center conveys and promotes the
fundamental corporate values throughout the company, thereby nurturing
and fostering its corporate culture. Open, active, and timely
communication with employees, customers, investors, and the public
makes for both credibility and trust.

Corporate Governance //

For detailed information about the Corporate Governance of GF see
pages 40 to 49 in the Annual Report 2013.

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Corporate Governance

The Board of Directors and Executive Committee of GF attach very
great importance to good Corporate Governance in the interest of
shareholders, customers, business partners, and employees. The
implementation and ongoing improvement of the generally accepted
principles of Corporate Governance ensure the necessary transparency
to enable investors to judge the quality of the Corporation. This
Report provides information on structures and processes, areas of
responsibility and decision-making procedures, control mechanisms as
well as the rights and obligations of the various stakeholders.

Contents //

The present publication fulfills all obligations of the relevant SIX
Swiss Exchange directive on information relating to Corporate
Governance in terms of content and order and is based on the Swiss
Code of Best Practice for Corporate Governance of economiesuisse, the
Swiss Business Federation. The Compensation Report is presented in a
separate chapter on pages 50 to 57. All data and information apply to
the cutoff date of 31 December 2013, unless otherwise noted. Any
changes occurring before the copy deadline on 14 February 2014 are
listed at the end of this chapter. Any changes occurring after the
copy deadline can be found on our website.

GF also publishes the Articles of Association of Georg Fischer Ltd,
the internal Organization and Business Rules, its policies, and much
more information online - Corporate Governance - Policies

More information about Corporate Governance

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Related topics on georgfischer.com

/content/gf/com/en/investoren/corporate-governance

/content/gf/com/en/investoren/strategie-2015/CorporateCultureValues

Compensation Report

Contents

This remuneration report provides information about the compensation
policy, the compensation programs and the process of determination of
compensation applicable to the Board of Directors and to the Executive
Committee of GF. It also includes details on the compensation payments
related to 2013. This report is written in accordance to the
transparency regulations of the Swiss Code of Obligations Art. 663b
bis and 663c, the standards related to information on Corporate
Governance issued by the SIX Swiss Exchange and the principles of the
Swiss Code of Best Practice for Corporate Governance of Economiesuisse.

The remuneration paid in accordance with the abovementioned
provisions of the Code of Obligations is listed and commented in the
consolidated financial statements (Annual Report 2013, page 102) and
in the statements of Georg Fischer Ltd (Annual Report 2013, pages 114
to 116).

Compensation policy

Overarching principles //

The Corporation’s compensation policy is designed along the
principles found in the Compensation Report on page 50 (see download
on the right).

Compensation Governance

Compensation Committee //

The Compensation Committee consists of three Board members. Since the
2013 Annual Shareholders’ Meeting, Ulrich Graf (Chairman),
Isabelle Welton and Zhiqiang Zhang are member of the Compensation
Committee. The Committee supports the Board of Directors in setting
the compensation policy at the highest corporate level and regularly
reviews the guidelines governing compensation of the executives. The
Committee also proposes the amount of compensation to be paid to the
Board of Directors, to the CEO, and to the other members of the
Executive Committee.

The Compensation Committee convenes as often as necessary, but at
least once a year. In 2013, the Committee held three meetings of
approximately one hour and a half each, according to the following schedule:

In the February meeting, the Committee evaluates the business
performance in the past financial year against the preset
objectives, and prepares a proposal to the Board of Directors on the
related bonus to be paid to the Chief Executive Officer and to the
Executive Committee members. In the same meeting, the Committee
determines the business objectives for the following business year
for the Chief Executive Officer and reviews those of the Executive
Committee members, before submitting them to the Board of Directors
for approval.

In the September meeting, the Committee reviews the overall
compensation policy.

In the December meeting, the Committee reviews and approves the
target compensation for the following business year for the members
of the Executive Committee based on a proposal from the CEO. The
Committee determines the target compensation of the CEO for the next
business year based on a proposal from the Chairman of the Board and
prepares a proposal to submit to the Board of Directors for
approval. The Committee also prepares a proposal on the compensation
to be paid to the members of the Board of Directors for the next
business year. Finally, the Committee reviews the preliminary
disclosure of compensation for the annual report.

The CEO and the Head of Corporate Human Resources attend the
Committee meetings in advisory capacity. The CEO does not attend the
meeting when his own compensation is discussed. In 2013, all Committee
members attended all meetings.

The Committee may call in external compensation specialists to
obtain independent advice and/or to get benchmarking compensation
data. In the year under review, the Compensation Committee mandated
CEPEC to conduct a benchmarking analysis on the compensation of the
Executive Committee.

Decision-making authority and supervision //

The compensation proposals and decisions are made based on the levels
of authority which can be found in the Compensation Report section on
page 51 (see download on the right).

On behalf of the Board of Directors, Internal Auditing annually
reviews the compliance of the compensation decision made with the
compensation regulations for the Executive Committee and the Board of Directors.

Method of determination of compensation //

The elements and levels of the compensation of the Board of
Directors and the Executive Committee are reviewed regularly and are
tailored to the relevant sector and labor market in which GF competes
for talent. For the purpose of comparison, the Compensation Committee
relies on compensation surveys published by independent consulting
firms and on publicly available information, such as compensation
disclosures from comparable companies. Comparable companies are
defined as companies with similar size in terms of sales, earnings,
number of employees, and geographic scope, which operate in similar
business segments and are headquartered in Switzerland. In 2013, no
changes were made to the structure of compensation of the Board of
Directors and of the Executive Committee. The levels of compensation
have been reviewed on the basis of the benchmarking analysis provided
by CEPEC and of the compensation disclosures of comparable companies.

The Compensation Committee also takes into consideration the
effective business and individual performance while determining the
compensation amounts to be paid to the Chief Executive Officer and the
other members of the Executive Committee. Individual performance is
assessed through the annual Management By Objectives (MBO) process,
where individual objectives are defined at the beginning of the year
and the achievement against those objectives is evaluated at the end
of the year. The objective setting and the performance assessment of
the members of the Executive Committee are conducted by the CEO. The
Chairman of the Board determines the objectives and evaluates the
performance of the CEO.

Architecture of compensation

Compensation of the Board of Directors //

The compensation regulation applicable to the Board of Directors is
regularly reviewed based on competitive market practice and retains
its validity for several years. The current regulation is in place
since 2010. In 2013, no change was made to the structure of
compensation for the Board of Directors, however the level of
compensation has been reviewed based on the compensation disclosure of
comparable companies.

The annual overall compensation for each member of the Board of
Directors depends on the responsibilities carried out and the time
effectively spent in the year under review. The compensation is
partially delivered in cash (fee) and in shares. The "Model
of compensation of the Board of Directors" can be found in the
Compensation Report on page 52.

Members of the Board receive a fixed fee and additional fees for
special tasks such as committee chairmanship, vice-chairmanship or
membership, and any other extraordinary activities/meetings. The fees
may be paid, wholly or in part, in Georg Fischer shares, at the
member’s discretion. The member can also elect to voluntary
block the shares for a period of five years. The value of the shares
used to convert the fee cash amount into shares is the closing share
price on the last trading day of the reporting year.

In addition, each member of the Board receives a fixed number of
Georg Fischer shares. The value of the share-related compensation is
calculated on the basis of the closing share price on the last trading
day of the reporting year. As of 2014, those shares will be blocked
for a period of five years.

Finally, members of the Board also receive a lump-sum allowance to
cover their business expenses. They do not receive additional
reimbursements of business expense beyond actual expenditures for
business travel.

The compensation of the Board of Directors is subject to regular
social security contributions but is not pensionable.

Compensation of the Executive Committee //

The principles of compensation of Executive Committee members, as
described above in the section “Compensation principles”,
are set out in a regulation and retain their validity for several
years. They were last reviewed by the Compensation Committee in 2012.

The compensation of the Executive Committee includes the following elements:

fixed base salary in cash

performance-related bonus in cash (short-term incentive)

share-based remuneration (long-term incentive)

benefits such as pension and social insurance funds

The "Model of compensation of the Executive Committee" can
be found on page 52 in the Compensation Report section (see download
on the right).

Fixed base salary //

The fixed base salary is determined primarily on the basis of the
following factors:

scope and complexity of the role, as well as the skills required
to perform the role

skills, experience, and performance of the individual in the role

external market value of the role

Fixed base salaries of the Executive Committee members are reviewed
every year on the basis of those factors and adjustments are made
according to market development.

Performance-related remuneration //

The performance-related remuneration is a variable incentive designed
to reward the achievement of business objectives of the Corporation
and its divisions, as well as the fulfillment of individual
performance objectives as defined within the MBO process, over a time
horizon of one year.

The business objectives are set by the Board of Directors in
accordance with the long-term strategy. They include absolute
financial figures and are set for a period of several years in order
to ensure sustainable and long-term performance. Currently, the
business objectives are: organic sales growth (excluding acquisitions
and divestitures), EBIT margin (EBIT in relation to sales), Return on
Invested Capital (ROIC) and asset turnover (sales in relation to
average net operating assets). For each objective, the Board of
Directors sets a threshold level of achievement under which there is
no payout, and a ceiling above which the payout is capped. The payout
factor for achievement levels between the threshold and the ceiling is
calculated by linear interpolation. While the thresholds and the
ceilings are valid for a period of several years, the achievement
against those is measured on a yearly basis and leads to a payout
factor for this portion of the variable incentive.

The individual objectives are set within the MBO process at the
beginning of the year. They are clearly measurable. At the end of the
year, the achievement against each individual objective is assessed
and leads to a payout factor for this portion of the variable incentive.

The "Weighting of the business and individual objectives"
for the CEO and the other Executive Committee members as well as the
"Thresholds and ceilings for the business objectives" are
described in the chart on page 54 in the Compensation Report.

The maximum variable incentive is expressed as a percentage of
the annual fixed base salary and amounts to 110% for the CEO and 90%
for the other members of the Executive Committee. The expected level
of performance (fulfillment of the multi-year business objectives and
of the individual objectives) corresponds to a bonus payout of
approximately 60% of the maximum bonus. In the review year, the
performance-related remuneration of the CEO was 62.5% of the fixed
base salary and that of the other Executive Committee members varied
between 48.4% and 52.4% of the fixed annual base salary.

Share-based remuneration (long-term incentive) //

The purpose of the sharebased remuneration is to align the interest
of the Executive Committee with the shareholders’ interests. The
CEO receives 750 restricted shares and each of the other Executive
Committee members receives 250 restricted shares. The shares are
transferred in January of the following year and are subject to a
blocking period of five years. The transfer value of the share is
based on the closing share price on the last trading day of the
previous business year. The shares are automatically unblocked in case
of liquidation or change of control.

The underlying shares of the share-based compensation program are
either treasury shares or are repurchased on the market.

Benefits //

Benefits consist primarily of retirement and insurance plans that are
designed to provide a reasonable retirement remuneration as well as a
reasonable level of protection against risks such as death and
disability. All members of the Executive Committee have a Swiss
employment contract and participate in the pension fund of GF offered
to all Swissbased employees, in which the fixed base salary is
insured. The pension fund exceeds the legal requirement of the Swiss
Federal Law on Occupational Retirement, Survivors and Disability
Pension Plans (BVG) and is in line with commensurate market practice.

Members of the Executive Committee do not receive any executive
benefits. They are entitled to a representation lumpsum allowance and
to reimbursement of business expenses in accordance to the expense
rules applicable to all employees at management levels employed in
Switzerland. The expense regulation has been approved by the relevant
cantonal tax authorities.

Other remuneration

The members of the Board and the Executive Committee of Georg Fischer
do not receive any further compensation for these functions. In particular:

Additional fees //

No member of the Executive Committee or the Board of Directors or any
person closely associated with them received any fees or other
payments for additional services to Georg Fischer Ltd or its Corporate
Companies in the 2012 business year.

Loans to members of governing bodies //

Neither Georg Fischer Ltd nor its Corporate Companies granted any
guarantees, loans, advances or credit facilities to members of the
Executive Committee or the Board of Directors or related parties.

Contractual terms //

The contractual agreements with the CEO and the Executive Committee
members contain a notice period of maximum twelve months.

Termination benefits //

Members of the Board or the Executive Committee have no contractual
entitlement to severance payments.

Remuneration for the 2013 business year

Board of Directors //

The members of the Board of Directors received cash compensation of
CHF 1 041 thousand in the year under review (previous year: CHF 854
thousand). Of this amount, Board members voluntarily drew 377 Georg
Fischer registered shares with a par value of CHF 10, equivalent to a
market value of CHF 237 thousand in 2013. In the previous year, they
drew had been 524 Georg Fischer registered shares with a par value of
CHF 10, equivalent to a market value of CHF 193 thousand. In addition,
a total of 1 600 Georg Fischer registered shares with a market value
of CHF 1 004 thousand were allocated as share-related compensation. In
the previous year, the allocation had been 1 603 Georg Fischer
registered shares, equivalent to a market value of CHF 590 thousand.
Together with other benefits, the total compensation paid to the Board
of Directors in the year under review amounted to CHF 2 224 thousand
(previous year: CHF 1 585 thousand). The detailed disclosure of
compensation to the Board of Directors in accordance with the
transparency provisions of the Code of Obligations is to be found in
the Compensation Report, page 56 (see download on the right).

The compensation paid to the Board of Directors for the year 2013
was above that of the previous year, due to the higher value of the
shares and to a weeklong strategy meeting in China, for which the
members of the Board of Directors were remunerated on a time-spent
basis as per the compensation regulations.

Executive Committee //

The members of the Executive Committee received cash compensation and
social security and pension payments amounting to CHF 5.2 million for
the year under review (previous year: CHF 4.8 million). 1 750 Georg
Fischer registered shares (par value of CHF 10) with a value of CHF 1
098 thousand, based on a share price of CHF 627.50 at year-end 2013,
were allocated to members of the Executive Committee for the year
under review (previous year: 1 750 Georg Fischer registered shares
with a value of CHF 644 thousand).

The detailed disclosure of compensation to the Executive Committee in
accordance with the transparency provisions of the Code of Obligations
is to be found in the Compensation Report on page 57.

Total compensation for the Executive Committee and the CEO in
2013 was higher than in 2012. The increase comes predominantly from
the increased value of the shares from CHF 368.00 in 2012 to CHF
627.50 in 2013 per share, whereas the number of shares granted
remained unchanged. In addition, the fixed remuneration was slightly
adjusted in order to reach competitive levels in line with the average
of our industrial sector, based on the benchmarking survey conducted
by CEPEC and on compensation disclosures from comparable companies.
The variable incentive related to the financial results of the
Corporation and the divisions was also slightly higher in 2013
compared to 2012.

In the 2013 business year, no severance payments were made to
persons who left governing bodies in the year under review or earlier.

Total compensation paid to the Board of Directors and Executive
Committee is contained in the Corporation’s total expenses.
Further details on compensation can be found on pages 114 to 115 of
the Annual Report.

The revision of the Articles of Association regarding the
remuneration of both Board of Directors and Executive Committee will
be reviewed by the Board of Directors during 2014, upon the assessment
and advice of the newly elected Compensation Committee, and submitted
for approval to the 2015 Annual Shareholders’ Meeting.